Dear George: "I recently closed on a house. Two months later I received a notice from my insurance company. It stated that my policy is going to lapse because of non-payment. After some legwork, I discovered my mortgage loan processor did not instruct the title company to take the payment for the 1st year insurance premium at closing. Is this a normal practice? Should I have been told that this was the case at closing?" -- Popped-for-1K

Dear Popped: The normal practice is that the lender requires the prepayment of the first year's hazard insurance premium at closing.

Dear George: "I am looking at a house to purchase. It has undergone extensive remodeling. The remodeling includes the removal of walls to reduce the number of bedrooms from three to two. Does having only two bedrooms reduce the number of interested buyers? If it does, will that affect the value when comparing with other homes of the same total square footage for sale in the area? Also, the garage entrance is from a fairly busy street. Might this also affect the valuation of the house?" -- 2BuyorNot2Buy

Dear 2BuyorNot2Buy: An appraisal performed by a certified appraiser is the most reliable method of determining value. The buyer's lender usually orders it. The purpose is to assure the lender as to the property's value. The lender wants to know that the value is equal to or greater than the stated sale price in the purchase agreement.

This is a "snapshot" of the variables relating to a specific residence. They are measured against the appraiser's expert opinion of "current market conditions" evidenced by recently closed transactions of other "comparable" residences. If the buyer-demand for equally-sized two bedroom homes on busy streets in that area is high, then that factor might influence the appraiser's opinion of value. However, if two bedroom homes located on busy streets take "forever" to sell, then that usually results in a lower valuation.

Dear George: "Under what conditions can listing agents terminate a Residential Real Estate Listing Agreement in Texas?" -- Unhappy Seller

Dear Unhappy Seller: The Texas Association of Realtors ("T.A.R.") provides an Ombudsman program. This is a free service. The program is designed to provide advice to consumers involved in Realtor disputes. Trained volunteers provide the advice. After listening carefully to the consumer's complaint, the volunteer lets the consumer know which alternatives are available. It appears you believe the termination of your listing agreement was not justifiable. Call T.A.R. at 1-800-873-9155. Ask for information about the Ombudsman program.

Dear George: "Daddy wanted to sell our ranch. It has been in our family for four generations. My cousin is a real estate broker. He offered to help Daddy sell the ranch. Within a month he had a buyer with an offer for Dad to sign. In the contract the broker said that he was representing both seller and buyer as an intermediary.

After he signed the contract, Dad found out a lot of information was withheld from him. He also discovered things the broker, Dad's cousin, told my Dad before he signed the contract, were not true. Dad backed out of the deal. The lawyer Dad hired advised him not to go to the closing.

We have now learned that our cousin the broker and the buyer planned to flip the property for three times the purchase price on our contract. We are now in a lawsuit. The buyer is suing Daddy. What are the duties of a broker acting as an Intermediary in a transaction?" -- Dutiful Daughter

Dear Dutiful Daughter: See Section 15C (j) of the Texas Real Estate License Act. That section lists the duties of a real estate broker when acting as an Intermediary. Your father should follow his lawyer's advice.

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George Stephens welcomes your questions by e-mail. Because of the volume of mail received, questions cannot be answered individually. Mr. Stephens is not a lawyer and this column does not contain legal advice. If you wish to obtain legal advice, please consult with an attorney or legal clinic.

Published: October 12, 2001

Use of this article without permission is a violation of federal copyright laws.

George C. Stephens, CRB is the Broker of deRaat Stephens, Inc. dba ERA Stephens Properties and the Director of Compliance for eRealty, Inc. Stephens served as 1998 Chairman of the 13,000+ member Houston Association of REALTORS® and is the Vice Chairman of HAR’s wholly owned subsidiary, e-Har, Inc. He is the 2001 Secretary/Treasurer of the 50,000+ member Texas Association of REALTORS® and TAR’s 2002 Chairman-Elect. Stephens holds a Texas Real Estate Broker license as well as a Texas Mortgage Broker License.